Tax boss wins access to time sheets in Tinkler fight

Deloitte’s Neil Cussen: lost the skirmish but could win the war over the proceeds of sale of Nathan Tinkler’s Patinack Farm Group.

In the latest skirmish over the multi-million dollar proceeds of sale of the Patinack Farm properties once owned by Nathan Tinkler, liquidators Neil Cussen and David Mansfield have been ordered to deliver their time sheets to the Commissioner of Taxation (CoT).

Following a directions hearing in the NSW Supreme Court on Monday, Justice Paul Brereton ordered the Deloitte duo to produce the time sheets and pay $1,117,984.79c from the proceeds of sale of property at Sandy Hollow, Broke and Port Macquarie into the trust account of their solicitors, Kemp Strang.

Apart from the sum of $359,228.61c which is to be forwarded to the CoT, the funds are to remain there until the court determines the substantive dispute between the parties, which focusses on whether the liquidators’ lien takes priority over the rights of the CoT as holder of a third party mortgage.

The CoT has a registered second mortgage over property that formed part of the Patinack land holdings and US investment bank Jefferies Group LLC also has a claim based on an untested security over Patinack property assets.

As the case proceeds the circumstances around how the CoT and Jefferies came by their respective securities are likely to be examined in depth but before that matter is aired the disputants are fighting over the proceeds of property sales already realised.

When the judge asked the CoT’s lawyer why the time sheets where relevant Craddock Murray Nuemann director Khaled Metlej responded that there was $450,000 worth of remuneration, the majority of which his client believed was referable to conservation of the PFH properties, which included a 3,300 acre stud farm at Sandy Hollow in the Upper Hunter Valley.

Some might see it as a curious and risky course for a model litigant to take.

The Commissioner wants to obtain the time sheets, digest them and deal with the issues before having to come back to court, Metlej said. Objections by the liquidators’ counsel were given short shrift.

“I will be astounded if Deloitte couldn’t produce the time sheets by pressing a button on a printer over the next 48 hours,” Justice Brereton said.

Cussen told SiN the time sheets weren’t an issue per se. The problem was that the CoT was resisting their claims for time spent and expenses incurred during the sale process, which was lengthy and involved a number of false starts.

“They’re not wanting to pay us anything for our time in relation to selling the properties and they’re trying to be difficult around what we spent our time on,” Cussen said.

“We don’t have a problem giving out our time sheets. We just don’t think they were necessary to produce. I’ve got a 65 page affidavit regarding the remuneration which I thought was enough.

“We’ve put on evidence, our remuneration is all set out as per the ASIC and ARITA requirements and that’s what we normally give to all creditors, including the Australian Tax Office (ATO),” he said.

It should also be noted that creditors – those admitted for voting of course like Gerry Harvey’s GH Nominees – have so far approved all the liquidators fees and costs. Yet an alleged creditor is now pressing for a review.

The motivation for the CoT’s vigour in squeezing the liquidators on fees might possibly relate to the millions it’s owed by Tinkler, who is inconveniently bankrupt. Or it might stem from another source.

“At the end of the day we say all this is a nonsense because the Commissioner is not a creditor and shouldn’t have stepped in front of small, unsecured creditors who’ve been pushed aside,” Cussen said, invoking the substantive issue that will be further ventilated when the parties return to the fray on December 11.

That is when the court is likely to hear more detail around the liquidators’ application to have the CoT’s registered mortgage set aside. Barring what at this point looks an unlikely truce, the liquidators intend to have the CoT’s second mortgage and Jefferies Group’s security ruled invalid.

With the potential for several million dollars to flow their way if successful they defendants are resisting but if Cussen and Mansfield are successful in knocking out the CoT’s mortgage, that could cloud the prospects for recoveries by the ATO in other proceedings where it is claiming an interest via a third party mortgage.

Some might see it as a curious and risky course for a model litigant to take.

About the Author

Insolvency News Online illuminates the practice of insolvency Australia-wide, highlighting the triumphs and travails of the nation’s registered practitioners and the accounting and legal professionals who work with them. INO is produced by Peter Gosnell, former business editor and senior business reporter at The Daily Telegraph newspaper. During a decade-long career, your correspondent reported on such notable corporate collapses as HIH, One.Tel, Westpoint and Fincorp as well as some of the nation's highest profile bankruptcies and the investigations and prosecutions arising from Australia's most notorious instances of white-collar crime.

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